Legendary Investor Warns of Profound Upheaval
Investor and billionaire Ray Dalio warns of the upheaval initiated by US President Trump. This is taking place on several levels. The result could be far worse than just a recession in the USA.
In an interview with the «NBC», Ray Dalio, chief investment officer of hedge fund Bridgewater Associates, warned that changes could occur at a domestic political level in the US, at the level of fiscal policy and in the international trading system, which could pose a major threat to more than just the US economy.
Dalio, who correctly predicted the financial crisis of 2008, believes that the current economic situation in the US is about to change direction.
«I think we are at a turning point right now and very close to a recession. And I'm worried that if this is not handled well, we could be facing something worse than a recession.»
A recession, as two consecutive quarters of falling GDP, will always happen, he said. «We are dealing with something that is much more profound. We have a collapse of the monetary order. We're going to change the monetary order because we can't spend the money supply.»
Change in the World Order
The billionaire investor sees «profound political changes in our internal order (...) and in the world order». You could compare this to the 1930s.
«I've studied history, and it keeps repeating itself. If you look at the tariffs, the debt, the rising power - which challenges the existing power - and look at the factors, these changes in the systems are very, very disruptive.» This could result in something much worse than a recession. But it could also be handled well, he said.
He called for debt discipline and a reduction in debt to 3 percent of GDP from US politicians, for example. Otherwise, there could be a problem with the supply and demand for government bonds.
Dalio was convinced that it was possible to defuse and resolve the existing conflicts through good negotiations. However, it depends on how this is done. It makes a big difference whether this happens in an orderly or chaotic manner.
